Denver-- Attorney General Ken Salazar announced today that his office has obtained a statewide grand jury indictment against eight persons in connection with an alleged warranty replacement scheme involving the fraudulent use of former Montgomery Ward warranties to obtain over $50,000 of goods from Sears stores in Denver, Jefferson and Arapahoe Counties.

The items obtained included primarily large screen HDTV's, camcorders, and home theater systems, as well as major kitchen appliances such as refrigerators, a range and a microwave oven.

The grand jury handed down its indictment on April 25 against James R. Smith, age 25; Rodney M. Selman, age 31; Michael D. Begay, age 22; Michael L. Sifuentez, age 22; Antoinette R. Hadley, age 27; Delores B. Hawn, age 36; April M. Rowan, age 22; and Linda A. Garcia, age 34. The eight are variously charged with 39 felony counts of theft, forgery and conspiracy for activity occurring in a 1 1/2-month period in July-August 2001. Anyone with information on the whereabouts of these persons is urged to contact Richard Lewis, an investigator with the Attorney General's Office, at 303-866-5773.

In the autumn of 2000, Montgomery Ward, Inc. (Wards), declared bankruptcy. In February 2001, Wards contracted with AON Innovative Solutions, Inc. (AON), to take over the administration of its warranty program. To facilitate the program, AON established a subsidiary company, National Products Care Company (NPCC), to manage warranty claims. NPCC, in turn, notified Wards customers that it would be administering warranty claims, and provided information on how to file warranty claims. Arrangements were made with Sears, Inc., and other retailers, to accept reimbursement from NPCC on warranty claims when an item had to be replaced.

When a customer contacted NPCC about a warranty problem, a decision was made whether to repair or replace the item. If the item could not be repaired, NPCC would issue the customer a purchase order, which could be taken to any Sears store, or other designated retailer, and exchanged for new merchandise. NPCC would then reimburse the retailer for the cost of the replacement item. Only one person at NPCC was authorized to complete and issue purchase orders for replacement items.

Defendants James R. Smith and Rodney M. Selman were employed by NPCC as supervisors in the Wards warranty program. Neither had authorization to prepare or issue purchase orders in connection with the program. The indictment alleges that Smith and Selman obtained a copy of an NPCC purchase order and proceeded to forge counterfeit purchase orders on Selman's home and work computers. Smith and Selman allegedly provided these forged purchase orders to fellow defendants who, with continuing assistance and direction from the Smith and Selman, obtained the television sets, home theater systems, camcorders and other appliances from various Sears stores and the Sears Denver warehouse.

AON's insurance arm, AON Insurance Company forwarded the suspected illegal activity to the Attorney General's office after AON detected discrepancies in the purchase orders. Salazar's office investigated and brought the matter before the statewide grand jury, resulting in the April 25 indictment.

The indictments have been filed in Arapahoe County District Court. Trial dates have not yet been scheduled.